Wednesday, June 29, 2016, PM | Leave Comment
If you are caring for an ill or aging parent, you may be clueless about how to start managing their finances if they are unable to.
It can be tricky knowing what you are allowed to handle, and what they need help with specifically.
Here are some steps to take to begin making sense of another person’s income and debts, and how to create a system that helps maintain financial stability for the rest of their life.
Survey Financial Accounts and Documents
This step will be much easier if your parents can set up a file while they are well.
This would include information about financial accounts and safe-deposit boxes, as well as the names and contact information of their financial professionals.
If such a file doesn’t exist, or your parent is not able to share this information, contact their accountant, attorney, or financial advisor. Their most recent tax return will also provide some of the information you might need.
To access this information, you’ll need to be declared power of attorney, a legal process your parent must initiate when well. If that hasn’t been done yet, consult an attorney who specializes in elder law for your area like Michigan estate law.
Plan to Pay Bills
If your parent is financially solvent, the next step is to take is paying bills. The easiest solution is to set up automatic debit so that when income is deposited, bills are immediately paid without mail coming to their address. This eliminates that overwhelming stack of paper mail and limits the risk for financial fraud as well.
As power of attorney, it’s important to keep careful records of your parents’ income and of the bills you pay on their behalf. Keep copies of checks, bank statements, receipts, tax returns, and other information in a dedicated file.
Even if your family relationships are currently amicable, you’ll need a paper trail if any questions arise about whether you’re handling a parent’s finances responsibly.
Consult a Financial Planner
If your parent has a chronic illness such as Alzheimer’s disease in which they are unable to care for themselves but may still live another 20 years, you might need more help for the long-term. That means you should make sure income and investments can cover living expenses over a longer time period.
A good financial planner can view the full landscape of your parent’s affairs and make recommendations that will help ensure they are cared for financially, no matter how long they live.
By following these steps, you can begin to put a plan in place for successfully managing a parent’s finances in the long term.Facebook.com/doable.finance